Optimal consumer search with prospect utility in hybrid uncertain environment

摘要

This paper studies a consumer search model with prospect utility in a hybrid uncertain environment. Hybrid uncertainty consists of the uncertainty of the consumer’s valuation for each product and the randomness of stockout. An optimal search strategy is designed for the consumer to search or buy a product. The results show that the presence of prospect utility can result in low purchase threshold. By comparative statics, we demonstrate that the consumer’s purchase threshold for low-value product increases with the risk coefficients for gains and losses, while the purchase threshold for high-value product decreases with the risk coefficients for gains and losses. In addition, we find that the consumer who is more sensitive to the loss will search for much less products. Finally, some numerical examples are given to illustrate the relationships between the model without and with prospect utility and further verify the effectiveness and credibility of the conclusions.